At some point, what appears to be a social crisis impacts an economy. Distracted driving has reached that point. A 2015, National Highway Traffic Safety Administration (NHTSA) report clearly defined not just the social costs of distracted driving in the United States but also the economic costs.
NHTSA reported, in 2010, there were 32,999 people killed, 3.9 M injured, and 24 M vehicles were damaged in motor vehicle crashes in the U.S. creating an economic costs of $242 B caused by distracted driving. Distracted driving creates lost worker productivity, increases medical, increases medical, legal, court, EMS, insurance administration, and traffic congestion costs. The NHTSA estimates that distracted driving, in 2015, cost every American $784 representing 1.6% of the nation’s $14.96 T GDP. These costs impact the cost of government, health care, automobile and insurance coverage. When quality of life valuations are considered, the NHTSA determined the societal harm of distracted driving in 2010 was $836 B with lost market and household productivity taking a $77 B hit, property damage $76 B, medical expenses $23 B, traffic congestion $28 B, and taxpayer costs $18 B. The costs of distracted driving are not going down. U.S. fatalities from traffic accidents rose 7.2% in 2015 to 35,092—the largest increase in 50 years—and distracted driving played a role in 10% of those deaths, according NHTSA. NHTSA found that fatalities from “distraction-affected” crashes increased 8.8% to 3,477 from 3,197 for that period.
Not to minimize the human tool, worker productivity losses, governmental expenses and other costs of distracted driving, but this automobile driving conduct is hitting regions and states hard that are leaders in the insurance industry. Money magazine reports that the Boston Globe reports that insurers plan on increasing auto premiums 3% to 6% on Massachusetts drivers this year, on top of increases of 6% to 9% in 2016. Insurers in North Carolina, meanwhile, have requested auto premium hikes averaging 13.8%, according to the Charlotte Observer. Drivers in neighboring South Carolina saw their auto insurance rates increase an average of 8.9% last year. Rising auto insurance rates impact consumers but also indicate the financial challenges distracted driving is having on the insurance industry.
The insurance industry is big business and has a major impact on the U.S. economy. There were 5,926 insurance companies in 2015 in the United States (including territories), including P/C (2,544), life/annuities (872), health (859), fraternal (85), title (56), risk retention groups (239) and other companies (1,261), according to the National Association of Insurance Commissioners.
The U.S. Bureau of Economic Analysis estimates that insurance carriers and related activities contributed $450.3 billion, or 2.6 percent, of U.S. GDP in 2014. The Department of Labor estimates the U.S. insurance industry employed 2.6 M people in 2016, and, of those, 1.5 M worked for insurance companies, including life and health insurers (811,900 workers), P/C insurers (648,200 workers), reinsurers (25,000 workers), and the remaining 1.1 M people worked for insurance agencies, brokers and other insurance-related enterprises. State like Ohio are also leaders in the insurance industry, and the Ohio Insurance Institute points out a couple key economic data points:
- Ohio’s insurance industry employment is now over 100,000-strong, with wages over $7 billion;
- Ohio’s average insurance industry salary is nearly $23,000 more than the average private sector salary; and
- Auto and homeowners insurance premiums remain affordable with Ohioans paying $150 less than the U.S. average for auto and $192 less for homeowners insurance.
Distracted driving is impacting the rates of America’s automobile insurance companies but also impacts the economic success of the regions and states that host the jobs of these companies. Distracted driving is now a public policy and public relations issue that state governments all over the United States will have to find a way to address or the social and economic impact will continue to grow.